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  • Cuba Special Report

  •   U.S. Businesses Eye Trade With Cuba

    U.S. Chamber of Commerce President Thomas Donohue, visiting Cuba to encourage private enterprise, speaks to students and teachers of Havana University. (AP)
    By Karen DeYoung
    Washington Post Staff Writer
    Wednesday, July 28, 1999; Page A1

    When Peter W. Nathan first asked the U.S. government in 1996 for permission to stage an exhibit of U.S. health care products in Cuba, he recalls, "I got the cold shoulder. . . . The term they used was 'not consistent with U.S. policy.' " His repeated requests over the next three years didn't get much further.

    But all that changed in May, said Nathan. This time, he said, U.S. officials from the several departments that manage the trade embargo against Cuba "can't do enough for me. They've been incredibly helpful." Officials have even suggested that the veteran trade fair organizer expand his list of U.S. companies hoping to do business with the Cuban government.

    Last week, invitations for the event, scheduled for next January, went out from Nathan to 5,000 American providers of everything from medicine and dental equipment to ambulances and pacemakers -- all vaguely classified as "drugs," the only products exempt from the embargo. Companies that accept will follow a parade of hundreds of American business and civic leaders who visited the island recently, including representatives of the U.S. Chamber of Commerce, the American Farm Bureau Federation, the Baltimore Orioles and Baltimore itself -- which this year became the first city to obtain a multiple-visit license and has set up a wide-ranging exchange program.

    The Clinton administration's liberalized interpretation of licensing requirements for Americans visiting Cuba, part of a series of measures announced early this year, has opened the door to pent-up demand for more contact with the island, particularly among business and agricultural interests. They have banded together with longtime advocates of normalized relations with Cuba -- and opponents of unilateral sanctions in general -- to form a powerful new coalition pushing the White House and Congress to end, or at least loosen, the 37-year-old sanctions against the government of President Fidel Castro.

    The last few months have brought calls for a partial or complete end to the restrictions on trade with Cuba from farm state members of Congress, including conservative Republicans pressed by struggling growers looking for export markets. Pharmaceutical, hotel and entertainment sectors long hoping to expand into Cuba have become newly invigorated, particularly since the U.S. Chamber of Commerce has more visibly taken up the cause.

    "We're saying on behalf of the American business community that it's time to look at this another way," said chamber president Thomas J. Donohue of the embargo. Donohue, who headed a three-day chamber visit to Cuba this month, said in an interview that he came back asking why the United States was missing out on investments in oil, mining and tourism, among other opportunities, that have been taken up eagerly by U.S. allies.

    "Who does well there? . . . It's the Canadians, the Germans, the French, the Italians. All of our friends -- we're not talking about China or the [Russians]. We need a new approach," he said.

    The Treasury Department, which issues licenses for Americans to visit Cuba through the Office of Foreign Assets Control, declined to release exact figures, saying through a spokeswoman that "more or less 6,000" licenses for individuals and groups have been issued over the past few years. John Kavulich II, head of the U.S. business-funded Cuba Trade and Economic Council, estimated that as many as 130,000 Americans -- most of them of Cuban descent -- will make licensed visits to visit Cuba this year and that another 25,000, primarily tourists traveling through third countries, would go illegally.

    "The fact that the Clinton administration has begun to provide a lot more licenses on a timely basis has increased dramatically the number of individuals applying," Kavulich said. He estimated that at least 3,000 U.S. business representatives would visit the island under license this year. Although virtually none can currently sell to Cuba -- even pharmacutical companies are limited by cash-only restrictions and miles of red tape on the U.S. side -- there is a widespread belief that change will eventually come, either in U.S. policy or in Cuba itself.

    The State Department also appears to have loosened the restrictions on Cubans visiting the United States. Maria de la Luz B'Hamel, who is in charge of North American policy in Cuba's Foreign Trade Ministry, returned to Havana Saturday after a 30-day tour of farm states and meetings with major U.S. agricultural associations. To the surprise of the Cuban government -- since sales of U.S. agricultural products to Cuban government entities are banned -- the State Department also issued a visa to the director of Alimport, Cuba's state purchasing agency for bulk food that last year bought $700 million worth of imports from Latin America and Canada, Europe and the Far East.

    Many inside the administration advocate moving closer to an opening with Cuba, but there is a disinclination to get out in front of Congress or antagonize the Cuban-American community and its elected allies. The licensing policy still is unevenly applied -- many licenses are inexplicably delayed or denied -- and the possibility of any real normalization of relations, at least as long as Castro, 72, is in power, remains remote.

    "The serious people who do policy stuff are supportive of change," one Senate aide involved in the issue said of the White House. But "at the highest political levels, where they count electoral votes, there's a nervousness about doing anything that changes the status quo for these communities."

    The pro-sanctions stance of conservative Cuban Americans, particularly the large concentration in southern Florida, and their representatives in Congress has been bolstered by Castro's continued hard-line policies against political freedom and private enterprise.

    But while there is little enthusiasm in this country for Castro or his government, an alignment has emerged between those who have long thought the best way to oust him is to expose the island to as much of America as possible and those who see Cuba as an unconquered market whose politics -- like those of China and Vietnam -- should not impede commerce.

    Frank Calzon, executive director of the pro-sanctions Center for a Free Cuba, acknowledged the change, saying, "There has been some shift in the correlation of forces on the Hill" away from unbending support for the embargo.

    According to USA Exchange, one of several powerful anti-sanctions lobbying groups set up over the past two years by the nation's leading business and trade organizations, 14 anti-sanctions pieces of legislation are pending in the House and 11 in the Senate. Most have bipartisan support, and some would end all unilateral sanctions, including those against Cuba.

    Six of the 25 pending proposals are Cuba-specific, aimed at ending the food embargo. Yet when the administration announced in April that it was lifting some prohibitions against food and medicine sales to specific countries -- a list that included Iran, Sudan and Libya -- Cuba was not mentioned.

    Imposed in the early years after Castro's 1959 overthrow of the government of Fulgencio Batista, the Cuba embargo was strengthened in 1992 and 1996 and remains among the most severe of U.S. unilateral sanctions. It includes a ban on all exports of U.S. products except pharmaceuticals and on the issuance of U.S. visas to most Cubans, along with restrictions on involvement of all Americans with Cuba through a Treasury licensing procedure that sharply restricts who will travel or send money there.

    Over the years, various administrations have incrementally loosened or tightened the restrictions in response to domestic political pressure and actions by the Castro government deemed worthy of punishment. In January, however, Clinton announced without any apparent precipitating event a series of measures aimed at easing the sanctions, including an increase in the amount of money Cuban Americans can send to relatives on the island; additional cities from which direct charter flights to Cuba could operate; opening of direct mail service; an increase in "people to people" contacts with Cuba; and permission for direct agricultural sales to private and nongovernmental entities there, primarily small produce cooperatives and family-run restaurants.

    It is the directive to increase "people to people" contacts that has led to more liberal interpretation of licensing rules. Thus, the city of Baltimore has established a virtual shuttle of exchanges that have taken dozens of city officials and private citizens involved in health care, sports, religion, education and the arts to Havana this year, and it has applied to extend its six-month multiple license due to expire in September. "I took another group down two weeks ago," said Lee Tawney, an assistant to Baltimore Mayor Kurt Schmoke. "If we're not playing the game [the Treasury Department] wants us to play, they can let us know."

    Business and agricultural representatives have passed increasingly through the same open door, even though Cuba -- despite a population of 11 million that makes it more populous than all but six U.S. states -- is unlikely to make many American businesses rich, even if the trade embargo disappeared.

    "Let me tell you, they won't be our biggest trading partner. We're doing billions and billions of dollars" of trade in Mexico alone, Donohue said, and Cuba is "way, way down the list. But is there a potential for oil? Yes. For mining and tourism? Yes. Ask Bill Marriott or the guys at the Hilton, do they want to let everybody else in the world buy up those beaches?"

    Donohue agreed with critics who suspect Castro may be content to host American businessmen as long as they are critical of their own government but has no real interest in promoting U.S. investment on the island. After the Cuban health minister complained to him about difficulties in purchasing U.S. pharmaceuticals, Donohue said, "I said the real problem is you don't want to buy that stuff. You want to complain about how you can't buy it." One of the chamber's goals, he said, is to "encourage the Cuban government to get off the dime. Give us a list of drugs, tell us what bank the money is in, and we'll see what we can do."

    American Farm Bureau president Dean Kleckner, who led a trip to Cuba in May, estimated that U.S. agricultural sales to Cuba -- primarily wheat, corn, soy products and rice -- could exceed $500 million annually if the embargo were lifted, and "for the longer term, maybe up to $2 billion. For American farmers, that is very good.

    "With the U.S. agricultural community in bad shape, having lost substantial exports to Asia in the last couple of years, we're looking for exports anywhere in the world," Kleckner said. "From the farm perspective, when they said, 'We want to buy from you,' we said, 'Well, now, we think this has been a good trip to Cuba.' "

    The prospects for farmers are good enough that a number of farm state Republicans -- including Senators John D. Ashcroft (Mo.), Pat Roberts (Kan.) and Rod Grams (Minn,) -- are among the 24 cosponsors of a bill to lift all food and medicine sanctions on Cuba introduced by Democratic Sen. Christopher J. Dodd (Conn.), a longtime advocate of normalizing relations with Havana. A similar bill introduced in the House by Rep. Jose E. Serrano (D-N.Y.) now has 150 co-sponsors from both parties.

    Among those yet to be convinced is Senate Foreign Relations Committee chairman Jesse Helms (R-N.C.), a strong sanctions supporter and sponsor of some of the most restrictive measures against Cuba. Helms did not oppose the recent lifting of food sales restrictions in Iran, Libya and Sudan in recognition of the farm crisis, but an aide said no similar support will be given to the Cuba proposals.

    Doing Business in Cuba

    The 37-year-old U.S. embargo against the government of Fidel Castro has prevented American companies from investing in Cuba, but U.S. allies have invested there, particularly in the past decade.

    Investment* by foreign private-sector and government-controlled companies in Cuba from 1990 to March 20,1999: (in millions of dollars):

    Canada $600 million

    Mexico $450 million

    Italy $387 million

    Spain $100 million

    Britain $ 50 million

    France $ 50 million

    Netherlands $ 40 million

    *Amounts either committed, or delivered during that period.

    Until 1992, U.S. -- owned foreign subsidiaries were allowed to trade with Cuba under license by the Treasury Department. Between 1980 and the end of 1992, the value of such trade was $4.6 billion.

    SOURCE: U.S.-Cuba Trade and Economic Council, Inc.

    © 1999 The Washington Post Company

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